Correlation Between United Airlines and Enphase Energy
Can any of the company-specific risk be diversified away by investing in both United Airlines and Enphase Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining United Airlines and Enphase Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Airlines Holdings and Enphase Energy, you can compare the effects of market volatilities on United Airlines and Enphase Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in United Airlines with a short position of Enphase Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Enphase Energy.
Diversification Opportunities for United Airlines and Enphase Energy
-0.95 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and Enphase is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Enphase Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enphase Energy and United Airlines is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on United Airlines Holdings are associated (or correlated) with Enphase Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enphase Energy has no effect on the direction of United Airlines i.e., United Airlines and Enphase Energy go up and down completely randomly.
Pair Corralation between United Airlines and Enphase Energy
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 0.63 times more return on investment than Enphase Energy. However, United Airlines Holdings is 1.59 times less risky than Enphase Energy. It trades about 0.34 of its potential returns per unit of risk. Enphase Energy is currently generating about -0.06 per unit of risk. If you would invest 7,182 in United Airlines Holdings on August 31, 2024 and sell it today you would earn a total of 1,947 from holding United Airlines Holdings or generate 27.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Enphase Energy
Performance |
| Timeline |
| United Airlines Holdings |
| Enphase Energy |
United Airlines and Enphase Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Enphase Energy
The main advantage of trading using opposite United Airlines and Enphase Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Enphase Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Enphase Energy will offset losses from the drop in Enphase Energy's long position.| United Airlines vs. RYANAIR HLDGS ADR | United Airlines vs. Southwest Airlines Co | United Airlines vs. Superior Plus Corp | United Airlines vs. NMI Holdings |
| Enphase Energy vs. ASML Holding NV | Enphase Energy vs. Superior Plus Corp | Enphase Energy vs. NMI Holdings | Enphase Energy vs. Origin Agritech |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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